Swiss Re Ag · SIX:SREN
Swiss Re — Investor Day (December 2015)
115 slides from Swiss Re's investor day presentation, Dec 8, 2015
Slide 1: Investors' Day
Investors’ Day Rüschlikon, 8 December 2015
Slide 2: Agenda Investors' Day 2015
Agenda Investors’ Day 2015 Time Content Management 10.00 – 10.30 Registration 10.30 – 12.00 Group strategic framework Michel M. Liès Capital allocation at the core of our strategy David Cole 12.00 – 13.00 Lunch break 13.00 – 13.35 Life Capital Thierry Léger 13.35 – 14.10 Corporate Solutions Agostino
Slide 3: Group strategic framework
Group strategic framework Michel M. Liès Group Chief Executive Officer
Slide 4: Swiss Re's current strategy has been successful
Swiss Re's current strategy has been successful Outperform our peers Strategic goal: • Reinsurance • Asset Management • Admin Re® The leading player in the Current wholesale position Smart expansion re/insurance industry • Corporate Solutions • Longevity & Health • High Growth Markets Investors' Day
Slide 5: Our business model has positioned Swiss Re as a leading player
Our business model has positioned Swiss Re as a leading player Swiss Re Group Corporate Reinsurance Admin Re® Solutions Life Capital1 P&C L&H Strategic goal Strategic goal Strategic goal • To be the world's • To be a focused, lean, • To be a recognised leading reinsurer global player in large force
Slide 6: Delivering on the 2011-2015 financial targets
Delivering on the 2011-2015 financial targets has been and remains Swiss Re's top priority ROE 700 bps above risk free EPS 10% average annual ENW per share growth plus average over 5 years (2011- growth rate, adjusted for dividends 10% avg. annual 2015) special dividends1 growth rate over 5 years 14
Slide 7: Market leading total return to our shareholders
We have delivered a market leading total return to our shareholders Annualised total return to shareholders (2011-2015)1 Swiss Re 12% 10%2 22% Sample of reinsurers3 11% 5% 15% Sample of re/insurers4 8% 4% 12% STOXX Europe 600 Insurance 14% MSCI Index5 9% Share price development Dividend driven retur
Slide 8: Swiss Re faces various challenges and opportunities
Swiss Re faces various challenges and opportunities Industry Low margins consolidation Current Low yield, low Volatility in High growth environment; Growth Markets regulatory changes Evolution of primary Reshuffling of players with rich value chain customer insights Future Impact of New and enlargin
Slide 9: Closing the protection gap and emerging risks
Closing the protection gap and providing solutions for emerging risks will improve global resilience Mortality: USD 105 trillion globally2 Protection gap Nat Cat: Casualty USD 1.3 trillion accumulation: 2005-20141 e.g. estimated US asbestos litigation costs USD 85bn3 Connected health: Cyber: 20% mar
Slide 10: Strategic framework to achieve our new financial targets
Today we introduce our strategic framework, which will enable us to achieve our new financial targets • Building upon our successful strategy introduced in 2011 • Moving to the next stage of our transformation into a capital allocator • Emphasising four areas of strategic action going forward Areas
Slide 11: Successful aspects of our business model are affirmed
Successful aspects of our business model are affirmed under our strategic framework Wholesale • Continued focus on wholesale re/insurance re/insurance • Pursue selected strategic initiatives to access attractive risk pools Global scale • Global reach enabling efficient capital allocation to achieve
Slide 12: Agenda
Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Investors' Day | Rüschlikon, 8 December 2015 12
Slide 13: Key drivers leading to outperformance in value creation
I II III IV Key drivers leading to outperformance in value creation Extensive R&D providing a Proprietary modelling capabilities Risk selection competitive advantage (requires to quickly adapt models based on economies of scale) lessons learnt and outlook Capital Capital deployment based on Optimal
Slide 14: Swiss Re actively manages liability and asset risk pools
I II III IV Swiss Re actively manages liability and asset risk pools Illustrative Liability risk pools P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital1 Mortality Longevity Health Property Casualty Specialty Asset risk pools Cash and short- term investments Government bonds Credit in
Slide 15: Portfolio selection maximises value creation
I II III IV Swiss Re’s portfolio selection maximises value creation • Asset risk selection is based on the requirement to match insurance liabilities within strict risk limits and the search for attractive risk-return patterns • Liability risk selection balances Swiss Re’s profitability levels and a
Slide 16: Agenda
Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Investors' Day | Rüschlikon, 8 December 2015 16
Slide 17: Three ways to broaden and diversify our access to risk
I II III IV Three ways to broaden and diversify our access to risk Geographies Clients Risks • Extend leadership in • Offer tailored solutions • Leverage Swiss Re’s mature markets • Access new clients knowledge and thought • Maintain market leadership • Develop innovative leadership in High approach
Slide 18: Geographies – initiatives to maintain leading position in HGM
I II III IV Geographies – Dedicated initiatives in place to maintain leading position in HGM Reinsurance Corporate Solutions Expansion in focus Further broadening countries the footprint • Organic growth • Organic growth Aspiration for 2020 • Partnerships • New offices • Acquisitions 30% HGM premium
Slide 19: Clients – Broadening our access through growth initiatives
I II III IV Clients – Broadening our access through profitable growth initiatives Reinsurance Corporate Solutions Life Capital Global insurance Large corporates Insurance companies companies Continued focus Large insurance companies Pension funds Regional and National Mid-size corporates Distributio
Slide 20: Swiss Re Global Partnerships broaden our client base
I II III IV Clients – Swiss Re Global Partnerships enables the Group to broaden our client base and address the protection gap • First dedicated Florida Caribbean Turkey Bangladesh United Kingdom public sector Hurricane risk Hurricane, Flood risk Earthquake pool Flood earthquake and team in the exce
Slide 21: Selected access to additional risk pools
I II III IV Risks – Selected access to additional risk pools Infrastructure Health portfolio Cyber Mortality gap investments Health lines are USD 2bn premiums USD 105tr mortality Infrastructure investment emerging as key markets globally in 2014 protection gap enhances economic growth Global health
Slide 22: Agenda
Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Investors' Day | Rüschlikon, 8 December 2015 22
Slide 23: Swiss Re optimises resources and platforms
I II III IV Swiss Re optimises resources and platforms to support capital allocation Examples • Alignment of the workforce to actively support our HGM strategy (e.g. Talent increase of FTE in Latin America and Asia by 421% and 66% respectively since 2011) IT • Simplification, modernisation, and inte
Slide 24: Workforce in HGMs more than doubled
I II III IV Swiss Re has more than doubled its workforce in HGMs between 2011 and 2015 Latin America FTEs Africa FTEs Asia FTEs Jan 2011 Jun 2015 Jan 2011 Jun 2015 Jan 2011 Jun 2015 ~140 ~730 ~40 ~60 ~8601 ~1 4301 Mexico China Brazil India2 ` Indonesia HGM Targeted by Reinsurance and Corporate Solut
Slide 25: Smart analytics and cognitive computing
I II III IV Swiss Re adopts smart analytics and cognitive computing to further extend its competitive positioning Selected examples from over 200 delivered cases For China, we have built a sophisticated model Transparent predicting motor accident frequencies leveraging a motor China wide range of da
Slide 26: Agenda
Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Investors' Day | Rüschlikon, 8 December 2015 26
Slide 27: Active differentiation remains pivotal
I II III IV Active differentiation remains pivotal to extending our lead as a knowledge company and allocator of risk capital Financial Client Knowledge strength relationships company • Capital strength • Preferred partner • Thought leadership • Financial flexibility • Decade-long • Technical expert
Slide 28: Direct access to clients in all Business Units
I II III IV Swiss Re benefits from direct access to clients in all Business Units Percentage of premiums derived from non-intermediated business, 9M 2015 52% 96% 11% 100% P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital1 • Swiss Re differentiation based on unique access to clients an
Slide 29: Distinctive thought leadership, R&D and industry dialogue
I II III IV Delivering distinctive thought leadership, R&D and industry dialogue through unique channels Distinctive thought leadership State-of-the art delivery Large and highly educated pool of talents First-class client events • 300 FTEs working on research matters • 30 FTEs in Economic Research
Slide 30: Agenda – Summary
Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Summary Investors' Day | Rüschlikon, 8 December 2015 30
Slide 31: Strategic framework positions us for challenges and opportunities
Our strategic framework positions us strongly vis-à-vis current and future challenges and opportunities Examples Examples Growing Industry Broadening our Low tailored conso- access to client margins solutions lidation and risk pools Current Low yield, low Agile capital Volatility in growth environ-
Slide 32: Four areas of strategic action create long-term value
Our four areas of strategic action create long-term value for our shareholders Profitability: ROE • Focus on attractive opportunities above our return hurdles I • Sustain long-term earnings through systematically allocate capital to risk effective portfolio steering pools / revenue streams • Deliver
Slide 33: Capital allocation at the core of our strategy
Capital allocation at the core of our strategy David Cole Group Chief Financial Officer
Slide 34: Capital allocation aims to deliver sustainable shareholder value
Swiss Re’s capital allocation aims to deliver sustainable shareholder value USD 10.6bn1 distribution to shareholders Agile use of funds to deliver shareholder Usage Capital return Inorganic Deleveraging Organic of funds value: Swiss Re Ltd PI3 • Capital return of up to USD 10.6bn to shareholders sin
Slide 35: Holistic capital management and performance framework
We use a holistic capital management and performance framework to systematically allocate capital 1 Generate sustainable shareholder value Strategic • Close the protection gap and respond to emerging risk pools by ambition delivering innovative solutions • Leverage distinctive skills and capabilitie
Slide 36: Allocating capital to risk portfolios consistently
We allocate capital to risk portfolios in a consistent manner across the Group • Cash flows Illustrative – performance per portfolio • Developed discounted single-year and and multi-year EVM recognised view of perfor- at performance mance inception on portfolio metric level • Capital costs recognise
Slide 37: High quality, well-balanced investment portfolio
Swiss Re continues to maintain a high quality, well- balanced investment portfolio 100% 1% 1% 1% 1% 11% 8% 8% 7% 90% Other 80% 33% 35% 38% 70% 44% Equities & alternatives (incl. Principal Investments) 60% Credit investments 50% 40% 32% Government bonds 39% 30% 41% 37% Cash and short-term 20% investm
Slide 38: Steady investment performance despite low yield
Steady investment performance through active asset re-balancing despite continued low yield environment 7% 6.3% 6% 5.3% 5.0% 5% 4.7% 4.4% 4.0% 4% 3.7% 3.8% 3.5% 3.6% 3% 2% 1.8% 1% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9M 2015 1 10-year avg US Treasury risk-free rates ROI Running yield
Slide 39: Dynamic allocation of capital under our strategic framework
We will maintain a dynamic allocation of capital under our strategic framework Swiss Re Group view, end of year figures, USD bn 2011 2012 2013 2014 Dividends1 Dividends1 Dividends1 Dividends1 1.1 2.8 3.1 2.6 Business Business Business Business Acqui- reinvestments Acqui- reinvestments Acqui- reinves
Slide 40: Risk tolerance criteria as basis for capital management
Swiss Re's risk tolerance criteria are the basis for our capital management, risk steering and limit setting Risk tolerance represents the amount of risk Swiss Re is willing to accept within the constraints imposed by its capital and liquidity resources, its strategy, and the regulatory and rating a
Slide 41: Very strong capital position
Swiss Re's very strong capital position enables the capital allocator role for the Group USD bn 245% 241% 223% 208% 213% 185% Group SST respectability level 48.7 52.2 52.6 38.5 40.7 18.5 19.1 19.8 21.6 23.6 SST 1/2011 SST 1/2012 SST 1/2013 SST 1/2014 SST 1/2015 SST risk-bearing capital SST target ca
Slide 42: Integrated approach to managing current and future risks
We ensure an integrated approach to managing current and future risks Group regulatory capital requirement Sensitivities on ENW SST 1/2015 in USD bn USD m, pre-tax1 Property and Casualty 9.5 Change in market values2 -10% -25% Life and Health 8.0 Economic net worth -958 -2 394 Financial market 12.1 C
Slide 43: Experience complying with economic solvency regimes
We have gained extensive experience in complying with economic solvency regimes Swiss Re operates under a comprehensive economic and risk based solvency regime since 2008 • SST is a more conservative economic-based regime than Solvency II • EU confirmed equivalence with Solvency II • Swiss Re’s inte
Slide 44: Group capital structure within leverage ratio target range
Our Group capital structure is well within our leverage ratio target range, providing further flexibility USD bn Core capital 1 Total hybrid incl. contingent capital Senior debt 2 LOC 3 Senior leverage plus LOC ratio 4 Subordinated leverage ratio 5 100% 90% 80% 8.5 6.7 6.5 6.0 5.4 70% 7.0 4.9 9.5 60
Slide 45: Target capital structure and strong funding platforms
Swiss Re’s target capital structure and financial flexibility is supported by strong funding platforms Corporate Reinsurance Life Capital Group Solutions Outlook Further reduction in line Letters of credit with reducing requirements in Reinsurance Established access to external funding Support bus
Slide 46: Systematic capital allocation for Group and Business Unit targets
Systematic capital allocation is essential for achieving our Group and Business Unit targets Group financial targets ROE ENW per share growth Rf+700bps 10% per annum 2016 Over the cycle 2015 2016 Over the cycle Year-end ENW + dividends from current year divided by 700bps above risk free (10-year US
Slide 47: Aligning measurement of financial targets with fundamentals
Aligning the measurement of our financial targets with underlying fundamentals ROE 10-year risk • Increases ambition of the Group free rate • Reflects shift towards longer duration business ROE • USD remains Swiss Re’s largest currency exposure Basket of rates • Management to monitor a basket of rat
Slide 48: Capital allocation aims to deliver sustainable shareholder value
Swiss Re’s capital allocation aims to deliver sustainable shareholder value We aim to deliver long-term shareholder value • Strategic framework enabling systematic allocation of capital to risk pools • Very strong capital position across multiple metrics • Steady investment performance through activ
Slide 49: Life Capital
Life Capital Thierry Léger CEO Life Capital (effective 1 January 2016)
Slide 50: Life Capital combines primary L&H expertise and businesses
Life Capital combines primary Life & Health insurance expertise and businesses… Economic Net Worth1 • Swiss Re’s Life Capital Business Unit will manage closed and open 10% life and health books • Composed of Admin Re® (plus Guardian2) and existing primary life and health activities • Significant cas
Slide 51: Attractive growth opportunities based on key trends
…with attractive growth opportunities based on a few key trends… Regulatory reforms Complex regulatory environment Aging society Efficient capital allocation Increase in longevity, Clients not willing to have health, and care needs capital tied-up in legacy operations Trends in Disruption in distrib
Slide 52: Expanded access to Life & Health risk pools
…and expanded access to Life & Health risk pools Ambition: • Diversify our L&H book to generate stable returns for shareholders • Provide excellent service and positive experience to our policyholders • Deliver 6-8% ROE in the mid-term Closed book Open book ~ 4m policies ~ 0.5m policies ~ USD 40bn a
Slide 53: Life Capital – Agenda
Life Capital – Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Investors' Day | Rüschlikon, 8 December 2015 53
Slide 54: Allocate capital to attractive Life & Health risk pools
I II III IV We will systematically allocate capital to attractive and growing Life & Health risk pools… Illustrative Example products Unit-linked policies Annuities Biometric protection • Indirect equity risk • Longevity risk • Mortality & • Persistency risk • Credit/spread risk morbidity risk • Per
Slide 55: Attractive revenue streams – Guardian acquisition
I II III IV …and attractive revenue streams – Guardian acquisition as an example • Demonstrates Admin Re®’s position as a leading closed life book consolidator in the UK • Transaction in excess of Group’s 11% ROE hurdle rate Diversified product mix Enhanced investment portfolio In % In % 1 1 1 0 38
Slide 56: Actively manage in-force portfolios to enhance cash generation
I II III IV We actively manage in-force portfolios to enhance cash generation Operational integration • Driving economies of scale with system and operational standardisation Asset optimisation • Managing asset portfolio to optimise expected yield and capital required Risk diversification • Harnessi
Slide 57: Solutions to a broad client base in open books
I II III IV In open books, Life Capital provides solutions to a broad client base Medical insurer Direct distributor Group life business Our partner: Our partner: Our clients: • Large medical health provider • New UK distributor replicating • Several Fortune 500 and 10k seeking to cross-sell into li
Slide 58: Ability to broaden geographic presence
I II III IV Life Capital has the ability to broaden its geographic presence Closed book Open book UK and Ireland – “strong market presence” Selective European presence • UK closed book market estimated at over GBP 400bn • Market presence in several reserves European countries, e.g. • Admin Re® has b
Slide 59: Leveraging proven administration platforms
I II III IV Life Capital leverages its proven administration platforms… Closed book – in-house ALPHA platform Open book – elipsLife and iptiQ • ALPHA (Administration of Life, Pensions, • First multi-client/ Single Health and Annuities) covers all products -language/-currency platform written in the
Slide 60: Continues to support Swiss Re clients
I II III IV …and continues to support Swiss Re clients Policy count in million Barclays 5.0 Zurich Life Life 4.5 0.2 0.8 Guardian1 Growth in 2016 4.0 MetLife • 0.5m open book 0.3 HSBC policies 3.5 0.9 Aviva Heritage 0.4 • Future policy 3.0 growth from 2.8 open/closed 2.5 books 4.3 2.0 3.9 3.9 Virgin
Slide 61: Key differentiators for Life Capital
I II III IV There are 4 key differentiators for Life Capital Trusted brand • Important asset in acquiring closed books • Key element in developing new partnerships and sourcing distribution partners • Interaction and reputation with regulators Integration & execution Biometric data & Customer servic
Slide 62: Life Capital – Agenda
Life Capital – Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Summary and Q&A Investors' Day | Rüschlikon, 8 Decem
Slide 63: Life Capital expected to be a strong contributor
Life Capital expected to be a strong contributor to the Swiss Re Group • Life Capital Business Unit builds on the Group’s strengths • Attractive growth opportunities • Differentiation through proven operating platforms, customer service, Conclusion knowledge and trusted brand • Building a balanced b
Slide 64: Corporate Solutions
Corporate Solutions Agostino Galvagni CEO Corporate Solutions
Slide 65: On track to deliver against 2015 targets
On track to deliver against 2015 targets Economic Net Worth1 • Commercial insurance Business Unit of the Swiss Re Group 10% • A key opportunity for growth Gross premiums written Return on Equity in USD bn in % 18.7 Target range 2015: 4-5 Target range 2015: 10-15 4.2 ~4 12.5 3.9 3.4 9.6 2.6 2.7 7.4 2
Slide 66: Corporate Solutions has transformed itself since launch in 2010
Corporate Solutions has transformed itself since launch in 2010… 2010 2015 Baseline year Achieved Employees ~1 000 ~2 400 Offices 32 52 Operating platform Harmonise and upgrade Operational sustainability Improve and maintain Sales Segment and upgrade Underwriting Maintain excellence Investor
Slide 67: Balance sheet aligning with peers
…and so has our balance sheet, aligning with peers Assets Liabilities in USD bn in USD bn 2011 9M 2015 2011 9M 2015 2.3 2.4 Assets under 6.8 Equity management +26% 8.9 0.5 Reinsurance Subordinated recoverables debt Other 9.9 -28% Other 17.8 assets 7.1 Liabilities 17.0 3.4 3.9 • Assets under manageme
Slide 68: Corporate Solutions – Agenda
Corporate Solutions – Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Investors' Day | Rüschlikon, 8 December 2015
Slide 69: Portfolio diversified across lines, geographies and industries
I II III IV Our portfolio is well diversified across lines of business, geographies and industries By line of business By geography GPW 9M 2015 GPW 9M 2015 14% 8% 11% 21% 24% Credit & Surety 29% Asia Pacific Special Lines Latin America 57% Casualty 36% EMEA Property North America By industry GPW Foo
Slide 70: Strong profitable growth compared to peers since 2010
I II III IV We delivered strong profitable growth compared to peers since 2010… 80% • Since 2010, continuously benchmarking ourselves against Combined ratio 2011 – 2014 86% a selected set of 8 peers Insurers with global master policy capabilities 95% Insurers with wholesale focus Insurers with multi
Slide 71: Careful in the current market
I II III IV …but are very careful in the current market 85% • Focused on maintaining underwriting discipline Combined ratio 9M 2015 92% Insurers with global master policy capabilities 95% Insurers with wholesale focus Insurers with multiregional focus Corporate Solutions Quadrants are determined bas
Slide 72: Commercial insurance market fragmented; Corporate Solutions ranks 25th
I II III IV The commercial insurance market is very diverse and fragmented. Corporate Solutions ranks 25th overall... Top-30 Players beyond top-30 Top-10 represent ~20% Top 11-30 represent ~15% of market of market Corporate Solutions 4.2 Insurers with global master policy capabilities Insurers with
Slide 73: Leader in Excess Layer Market, expanding into next segment
I II III IV …but is a leader in the Excess Layer Market, and expanding into the next segment 2014 commercial insurance market premium: USD 740bn in USD bn Excess Layers Wholesale Main characteristics Penetration 130 (large corporations) Deal size Primary Lead Deal complexity 70 (mid-sized corporatio
Slide 74: On our way to become a Primary Lead insurer
I II III IV We are on our way to become a Primary Lead insurer Ambition: Generate additional premiums of USD 1.0bn – 1.5bn by 2020 EMEA: North America: • Italy (P&C, FinPro, Marine) • Canada (P&C) • France (P&C, Marine) • US (Property, FinPro; 2016: Casualty) • Germany (P&C; 2016: FinPro) • UK (2016
Slide 75: Distribution footprint is global and growing
I II III IV Our distribution footprint is global and growing… 52 offices across 20 countries North America: 23 offices EMEA: 12 offices Asia Pacific: 10 offices Latin America: 7 offices Local presence & Local presence & Local insurance insurance license reinsurance license license Note: Latin Americ
Slide 76: Strengthened presence in key High Growth Markets
I II III IV …and we strengthened our presence in our 12 key High Growth Markets Mexico Turkey UAE India China Dubai office opened Sun Alliance China in 2012 acquisition in 2015 Hong Kong Colombia Seguros Confianza acquisition in 2014 Chile Brazil South Africa Singapore Malaysia UBF acquisition in Of
Slide 77: Hired new employees since launch in 2010
I II III IV We hired ~2 000 new employees since launch in October 2010… 2010 2015 Baseline year Achieved ~7% ~25% Number of employees ~200 (~600) ~600 ~2 400 Intra Group ~600 shifts Attrition Replacements 33 Inorganic ~600 growth Organic ~1 000 growth • Tailor-made onboarding programme • Employee en
Slide 78: Significantly increased our productivity
I II III IV …and we significantly increased our productivity Work units per FTE Premiums per FTE in USD m 2013 H1 2015 2013 H1 2015 +23% +10% productivity productivity increase increase ~135 ~3.2 ~110 ~2.9 • Productivity gains achieved through: – Re-design and simplification of end-to-end underwriti
Slide 79: Three key factors differentiate us from competitors
I II III IV Three key factors differentiate us from competitors Corporate Solutions' value proposition Opens doors and attracts • Leading brand talents • Financial strength • "We are here to stay“ ~500 transactions with • Large net capacity USD 100m capacity or more in 2014 • Innovation ~40 innovati
Slide 80: Innovation capabilities acknowledged by the market
I II III IV Innovation capabilities in several areas, acknowledged by the market Bespoke structures New risks Derivative solutions • Multi-line/multi-year • Cyber risk: • Temperature and weather solutions Partnership with related derivatives • Non-damage business IBM • Crop shortfall derivatives int
Slide 81: Corporate Solutions – Agenda
Corporate Solutions – Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Summary and Q&A Investors' Day | Rüschlikon,
Slide 82: Key messages
Key messages • On track to deliver against 2015 targets • Transformed into a larger and more solid player, with a Conclusion – Distinct value proposition building on our leading brand, large net capacity and innovation capabilities – Leadership position in the Excess Layer Market – Distribution netw
Slide 83: Reinsurance
Reinsurance Christian Mumenthaler CEO Reinsurance
Slide 84: Swiss Re's largest Business Unit delivers strong results
Swiss Re’s largest Business Unit delivers strong results Economic Net Worth1 • Wholesale reinsurance leader offering products and related services L&H in property and casualty, as well as in life and health 31% • Foundation of Swiss Re Group’s strength 49% P&C • Strong performance over the last year
Slide 85: Reinsurance – Agenda
Reinsurance – Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Investors' Day | Rüschlikon, 8 December 2015 85
Slide 86: Group-wide process for business steering and underwriting
I II III IV Since 2006 we have a Group-wide process for business steering and underwriting which is successfully applied in Reinsurance Swiss Re - Steering Framework Key success factors: •1 Integrated economic framework to steer both P&C and L&H Reinsurance businesses, including planning, pricing 4
Slide 87: Shifted portfolios in line with underwriting framework
I II III IV We shifted the portfolios in line with our underwriting framework and growth strategy P&C Reinsurance portfolio composition1 L&H Reinsurance portfolio composition1 US GAAP Gross Earned Premiums US GAAP Gross Earned Premiums 7% 7% 7% 7% 8% 9% 14% 15% 15% 18% 20% 21% 4% 19% 20% 23% 11% 12%
Slide 88: Transactions become increasingly important
I II III IV Transactions become increasingly important Development of transactions1 • EVM underwriting profit substantially increased over the EVM underwriting profit in USD bn All figures as priced past 5 years 0,8 • Increasing solvency and capital standards support transactions, especially L&H Rei
Slide 89: P&C – consistently outperforming the market on profitability
I II III IV P&C – Swiss Re has been consistently outperforming the market with regards to profitability Market share of top 7 reinsurers Swiss Re P&C Reinsurance revenues and operating income2 share vs other reinsurers 40% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 2013 2014 9M 2015 Revenues1 Operat
Slide 90: L&H – significant portion of profit pool
I II III IV L&H – Swiss Re with significant portion of profit pool Market share of top 6 reinsurers Swiss Re L&H Reinsurance revenues and operating income2 share vs other reinsurers 40% 70% 30% 20% 10% 0% -10% 2009 2010 2011 2012 2013 2014 9M 2015 Revenues1 Operating income2 2014 was impacted by Swi
Slide 91: L&H Reinsurance shows strong underlying results
I II III IV L&H Reinsurance shows strong underlying results – well on track to achieve 2015 ROE target Operating income adjustments • 2014 results impacted by decisive management actions, setting the in USD m FY 2014 9M 2015 foundation for profitable growth Operating income of which approximately 33
Slide 92: Four focus areas to broaden client base
I II III IV Four focus areas to broaden and diversify client base to increase access to risk Regionals & Nationals (R&N) Significant growth in volume and number of clients since start of initiative Casualty We actively manage the Casualty business according to the pricing cycle Health Addressing the
Slide 93: R&N – strong growth in volume and clients
I II III IV R&N – strong growth in volume and number of clients since start of initiative in 2011 Premium development R&N (P&C only)1 • Since the start of our R&N initiative more than 100 new US GAAP Gross Earned Premiums (USD bn) P&C clients have been added on 6 average per year +7% • At the same t
Slide 94: Casualty – managing according to pricing cycle
I II III IV Casualty – we pro-actively manage the Casualty business according to the pricing cycle Premium development Casualty1 • In 2014, Casualty contributed around 11% to Reinsurance EVM US GAAP Gross Earned Premiums (USD bn) Underwriting Profit1 7 • EVM profit margin2 in 2014 at 6 +17% ~7%; fur
Slide 95: Health – addressing health-protection need of ageing population
I II III IV Health – addressing the health-protection need of the ageing population Premium development Health1 • Increasing demand for primary health products, particularly in US GAAP Gross Earned Premiums (USD bn) Asia and the US 4 • Cessions to the reinsurance market are expected to increase +21%
Slide 96: High Growth Markets – continue to expand geographically
I II III IV High Growth Markets – continue to expand geographically Premium development HGM1 • Significant growth achieved over past years, especially in Asia US GAAP Gross Earned Premiums (USD bn) 6 • Volume reduction of low-margin China Motor QS due to C-ROSS2 +17% 5 • Profitability3 of remaining
Slide 97: High Growth Markets – shift of resources ongoing
I II III IV High Growth Markets – shift of resources ongoing Allocation of Reinsurance origination1 staff 1 503 1 584 1 691 1 728 1 740 2% 2% 2% 2% 2% 2% 3% 4% 5% 5% Since inception of our 11% High Growth Market 13% (HGM) initiative in 16% 2011 we have 17% 17% systematically re- allocated client fac
Slide 98: R&N – substantial productivity gains
I II III IV R&N – substantial productivity gains Market underwriter concept Fitting offering Launched globally 20 markets • Market underwriter concept, launched • Client buying preferences have been in 2010, is currently applied in 20 assessed in detail markets globally; further roll-out in • Goal i
Slide 99: Platforms – consolidation of applications and systems
I II III IV Platforms – consolidation of applications and system landscapes progressing well Integrated end-to-end approach Service and Accounting and Origination along the value chain control reporting 2007 - 2017: P&C Application and Approximately USD 240m invested to globalise and rationalise lan
Slide 100: Differentiation based on three key pillars
I II III IV Our differentiation is based on three key pillars Financial • Very strong capital position (e.g. SST 1/2015 for SRZ: 217%) strength • SRZ rating: S&P AA-, Moody’s Aa3, A.M. Best: A+; all stable outlook • Leading and highly diversified global reinsurer Client relationships • Highly intera
Slide 101: Client relationships – high touch interaction model
I II III IV Client relationships – we have a “high touch” interaction model Visualisation of an interactive client relationship NPS in line with client interactions increase Number of client interactions NPS score Global Client 90000 45 42 80000 41 40 70000 40 36 60000 35 50000 30 40000 30 30000 200
Slide 102: Long lasting and stable client relationships
I II III IV Client relationships – we maintain long lasting and stable relationships with our clients Development of 100 largest P&C and • Business from long lasting and L&H Reinsurance clients stable client relationships contributes to a large part of our EVM premiums, 2010-2014 overall result • Re
Slide 103: Knowledge company – employees enable unique solutions
I II III IV Knowledge company – our employees and their range of backgrounds enable us to develop unique solutions Reinsurance has dedicated experts in a multitude of areas – a few examples: Ageing Atmospheric Trend Spotter Societies Perils Expert Retakaful Expert Medical Specialist Researcher L&H T
Slide 104: Full service support with wide range of products and services
I II III IV Knowledge company – full service support to clients with wide spectrum of products and services Supporting clients with traditional and innovative reinsurance solutions Directly supporting clients, e.g. • New/ co- product development (e.g. senior cancer products) Mutual • Portfolio/risk
Slide 105: Financial benefits from our differentiation approach
I II III IV Knowledge company – financial benefits from our differentiation approach Differentiation example for Globals Differentiation benefits built on 3 sources ~40% of Globals EVM underwriting profit originated as result of differentiation 1. Preferential terms & conditions 2. ~60% ~40% Private
Slide 106: Reinsurance – Agenda
Reinsurance – Agenda I systematically allocate capital to risk pools / revenue streams II III broaden optimise and diversify client resources and base to increase platforms to support access to risk capital allocation IV emphasise differentiation Summary and Q&A Investors' Day | Rüschlikon, 8 Decemb
Slide 107: Reinsurance Strategy remains valid
Reinsurance Strategy remains valid and strongly contributes to the Group’s strategic framework • Reinsurance is a key contributor to the overall Group performance • Proven track record in portfolio steering – consistent outperformance • Significant growth achieved in targeted areas – High Growth Mar
Slide 108: Wrap-up
Wrap-up Michel M. Liès Group Chief Executive Officer
Slide 109: Systematic capital allocation to risk pools is at the core
Systematic capital allocation to risk pools is at the core of our strategy Long-term Broad and diversified access shareholder value to risk pools Client segments Capital markets Risk pools Capital Capital (re-) management allocation priorities Access/cost Continuous Economic based of funding knowled
Slide 110: Our strategic framework will drive value creation
Our strategic framework will drive value creation Target liability Strategic asset Business portfolio allocation steering I Leadership systematically allocate capital to risk Talent & across pools / revenue streams geographies footprint II broaden III optimise Innovation and diversify resources and
Slide 111: Delivering on our new financial targets is our top priority
Delivering on our new financial targets is our top priority Profitability: Growth: ROE ≥ risk free + 700bps ENW per share 10% p.a. ROE ENW per share growth Rf+700bps 10% per annum 2016 Over the cycle 2015 2016 Over the cycle Year-end ENW + dividends from current year divided by 700bps above risk fre
Slide 112: Our vision and mission
Our vision We make the world more resilient. Our mission Together, we apply fresh perspectives, knowledge and capital to anticipate and manage risk. That’s how we create smarter solutions for our clients, helping the world rebuild, renew, and move forward. Investors' Day | Rüschlikon, 8 December 201
Slide 113: Investors' Day | Rüschlikon, 8 December 2015
Investors' Day | Rüschlikon, 8 December 2015
Slide 114: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2016 23 February Annual Results 2015 Conference call 16 March Publication of Annual Report 2015 and EVM 2015 22 April 152nd Annual General Meeting Zurich 29 April First Quarter 2016 Results Conference call Investor Relations contacts Hotline E-mail +4
Slide 115: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans objectives, targets and trends) and illustrations provide current expectations of future events based on certain assumptions and include an